Monday was day 13 for the daily dollar cycle and we see the dollar continuing lower.
The dollar has already broke below the previous daily low. So the dollar is in a failed daily cycle and will continue lower until it prints a daily cycle low. At 13 days, the dollar has five more days before it enters its timing band for a daily cycle low.
Quite frankly, with the dollar in a failed daily cycle, I was expecting a little more enthusiasm from the precious metals.
Gold’s daily cycle peaked in late October. This past Wednesday it formed its lowest point since the October peak. So while gold broke the declining trend line last Wednesday, there has been no bullish follow through. A break above 1251.3 forms a swing low and signals a new daily cycle.
Stocks printed a swing low last Wednesday. The swing low was accompanied with a clear and convincing trend line break on Friday signaling a new daily cycle. This being the fourth daily cycle of the current intermediate cycle. Our framework calls for this cycle to form as a left translated cycle peaking by day 20 before rolling over into an intermediate cycle decline.
Meanwhile bonds are at important juncture.
Bonds formed a left translated daily cycle low in late November. The subsequent rally has been contained by the declining trend line. Bonds just backtested their recent daily low. Bonds will need to break above the declining trend line or risk printing another failed daily cycle.